August 23, 2013 / 4:20 AM / 6 years ago

China's Xiamen to buy six Boeing 787s to launch long-haul flights

The Boeing logo is seen at their headquarters in Chicago, April 24, 2013. REUTERS/Jim Young

SINGAPORE (Reuters) - Chinese carrier Xiamen Airlines has finalized a long-awaited deal for six Boeing 787 aircraft worth $1.27 billion at list prices, allowing it to begin long-haul services to the United States and Europe in 2014.

The airline’s parent, China Southern Airlines Co Ltd (600029.SS), said in May 2011 that it had signed a letter of agreement for the six aircraft, but the deal was held up pending approval from the Chinese government. That came this week, according to sources familiar with the deal.

“We’ve confirmed the order. The first jet will be delivered on July 25 next year,” said Xiamen Airlines spokeswoman Shen Zikun. Boeing Co (BA.N) declined to comment.

Xiamen, which is a member of the SkyTeam alliance, is one of only a handful of all-Boeing aircraft operators. It flies its Boeing 737s and 757s on domestic routes and regional services to Northeast and Southeast Asia.

It plans to use the 787s to launch long-haul services from its home in Xiamen in the southeastern Fujian province which is one of China’s fastest growing economic zones. It has not yet confirmed the U.S. and European destinations it will serve.

Most flights from China to Europe and the United States go through one of the three main hubs of Beijing, Shanghai and Guangzhou, and passengers normally get connecting flights from there to their final destinations.

The country’s big four carriers - Air China Ltd (601111.SS), China Eastern Airlines Corp Ltd (600115.SS), China Southern and Hainan Airlines Co Ltd (600221.SS) - dominate these long-haul routes.

But airport congestion and increasing demand for point-to-point connections mean that these airlines and their subsidiaries are looking at other cities to serve as ports of entry into China.

This makes China a highly lucrative market for larger twin-aisle passenger aircraft like the Boeing 777 and 787 and the Airbus EAD.PA A330 and A350, that can cover the long distances, according to officials from both aircraft makers.

Reporting by Siva Govindasamy in Singapore and Fang Yan in Beijing; Editing by Jeremy Laurence

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